The UK economy grew by 0.6 percent in the second quarter, according to the latest figures from the Office for National Statistics (ONS). This marginal slowdown compared to the previous three months’ robust growth of 0.7 percent was in line with economists’ expectations, providing a glimmer of hope for the new Labour government led by Prime Minister Sir Keir Starmer. Monthly GDP growth stood at zero in June, following a 0.4 percent expansion in May.
Hailey Low, an economist at the National Institute of Economic and Social Research, commented that the GDP figures “signal that growth remains on course, building on Q1’s strong performance.” However, she also highlighted the persistent challenges faced by the UK economy, such as low productivity growth, strained public finances, and inadequate infrastructures, which have hindered sustained growth.
Chancellor Rachel Reeves acknowledged the scale of the challenge inherited by the government after more than a decade of low economic growth. Reeves argues that without boosting Britain’s long-term growth rate, the country risks being trapped in a “doom loop” of high taxes and poor public services. In contrast, former Conservative chancellor Jeremy Hunt claimed that the figures prove Labour has inherited a growing and resilient economy, dismissing Reeves’ attempt to blame her economic inheritance for the decision to raise taxes.
The UK economy’s performance in the second quarter was driven by a 0.8 percent growth in the services sector, while the production and construction sectors experienced offsetting falls of 0.1 percent. GDP per head, a crucial indicator of living standards, posted the second consecutive quarterly expansion but remains below the level of the same quarter last year following seven quarters of contraction.
Despite the challenges, the UK’s GDP quarter-on-quarter figure for the three months to June compares favourably with a 0.3 percent expansion in the Eurozone and 0.7 percent growth in the US. However, economists warn that the current pace of economic growth is unlikely to be maintained in the second half of the year due to factors such as weaker wage growth, high interest rates, and persistent supply constraints.
As the UK navigates its economic recovery, the government faces the daunting task of addressing long-standing issues while promoting sustainable growth. The path ahead remains uncertain, but the latest GDP figures offer a glimmer of hope for the nation’s economic prospects.
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